On Oct. 5, 2015, NeighborWorks America released highlights from its third annual national housing survey. Aspirations of homeownership remain strong, with 87 percent of adults saying that homeownership is an “important” part of the American Dream, but an increasing percentage of consumers with student loan debt worry about their homeownership future, and a large percentage of consumers say that the mortgage process as complicated. These factors are just a few of the forces holding back the housing market from a more robust, and broad-based recovery.
The national telephone survey asked questions that examined the relationship that student loan debt burdens are having on homeownership. It found that in 2015, 28 percent of adults knew someone who delayed the purchase of a home because of their student loan debt burden, compared to 24 percent in 2014. Importantly, of the people who reported that they held student loan debt, 57 percent said that the debt was “somewhat or very much” an obstacle to homeownership, up from 49 percent in 2014.
The complexity of the home buying process may be dampening enthusiasm for homeownership, despite historically low mortgage rates. Approximately 70 percent of adults said that they strongly or somewhat agreed “that the home buying process is complicated”, up from 67 percent in 2014, but within the survey’s margin of error. Importantly, for people who hold student loan debt, 76 percent of them say that the home buying process is complicated, up from 70 percent in 2014.
Nevertheless, homeownership remains a goal for most, and NeighborWorks America supports a range of programs that help consumers understand the process, develop reasonable budget plans, and prepare financially for what is usually the biggest purchase most make in their lifetime.
This positive view of homeownership is more evident among minorities, the fastest growing segment of homebuyers. However, the intensity has declined from the year before. Sixteen percent of African-Americans and 10 percent of Hispanics said that homeownership is the most important part of their view of the "American Dream," compared to 8 percent of whites. In 2014, twenty-six percent of African-Americans, 18 percent of Hispanics, and 8 percent of whites said that homeownership was the most important part of the American Dream.
Perhaps most troubling for the housing market in the future is that nearly one-in-five people with student debt (19 percent) said that their view of homeownership has changed for the worse since the housing crisis, statistically unchanged from 20 percent in 2014. In contrast, just 11 percent of people without student loan debt said that their view of homeownership has worsened since the housing crisis, down from 13 percent in 2014, and within the margin of the survey error.
For NeighborWorks organizations and other nonprofits that offer homeownership services, this gap presents an opportunity. According to the survey, consumers with student loan debt are overall more likely to seek out the advice of a nonprofit housing counselor when pursuing homeownership, 24 percent in 2015 (essentially flat from 25 percent in 2014), than those without such debt at 14 percent, again essentially flat from 13 percent in 2014.